SUBADVISORY AGREEMENT
TEMPLETON INSTITUTIONAL FUNDS, INC.
(on behalf of Xxxxxxxxx Fiduciary Non-U.S. Core Equity Series)
THIS SUBADVISORY AGREEMENT made as of the 10TH DAY OF May, 2002, by and
between FRANKLIN XXXXXXXXX ASSET STRATEGIES, LLC, a Delaware limited liability
company (hereinafter called "FTAS") and FIDUCIARY INTERNATIONAL, INC., a New
York corporation ("Fiduciary").
W I T N E S S E T H
WHEREAS, FTAS and Fiduciary are each registered as an investment
adviser under the Investment Advisers Act of 1940 (the "Advisers Act"), and
engaged in the business of supplying investment advice, and investment
management services, as an independent contractor; and
WHEREAS, FTAS has been retained to render investment advisory services
to the Templeton Fiduciary Non-U.S. Core Equity Series (the "Fund"), a series of
Templeton Institutional Funds, Inc.(the "COMPANY"), an investment management
company registered with the U.S. Securities and Exchange Commission (the "SEC")
pursuant to the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, FTAS desires to retain Fiduciary to render investment
advisory, research and related services to the Fund pursuant to the terms and
provisions of this Agreement, and FIDUCIARY is interested in furnishing said
services.
NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto, intending to be legally
bound hereby, mutually agree as follows:
1. FTAS hereby retains Fiduciary and Fiduciary hereby accepts
such engagement, to furnish certain investment advisory services with respect to
the assets of the Fund, as more fully set forth herein.
(a) Subject to the overall policies, control, direction
and review of the Company's Board of Directors (the "Board") and to the
instructions and supervision of FTAS, Fiduciary will provide a continuous
investment program for the Fund with respect to that portion of the Fund's
assets designated by FTAS, including allocation of the Fund's assets among the
various securities markets of the world and, investment research and advice with
respect to securities and investments and cash equivalents in the Fund. So long
as the Board and FTAS determine, on no less frequently than an annual basis, to
grant the necessary delegated authority to Fiduciary, and subject to paragraph
(b) below, Fiduciary will, with respect to the portion of the Fund's assets over
which it has been given responsibility, determine what securities and other
investments will be purchased, retained or sold by the Fund, and will place all
purchase and sale orders on behalf of the Fund.
(b) In performing these services, FTIL shall adhere to
the Fund's investment objectives, policies and restrictions as contained in its
Prospectus and Statement of Additional Information, and in the Trust's
Declaration of Trust, and to the investment guidelines most recently established
by FTASL and shall comply with the provisions of the 1940 Act and the rules and
regulations of the SEC thereunder in all material respects and with the
provisions of the United States Internal Revenue Code of 1986, as amended, which
are applicable to regulated investment companies.
(c) Unless otherwise instructed by FTAS or the Board, and
subject to the provisions of this Agreement and to any guidelines or limitations
specified from time to time by FTAS or by the Board, Fiduciary shall report
daily all transactions effected by Fiduciary on behalf of the Fund to FTAS and
to other entities as reasonably directed by FTAS or the Board.
(d) Fiduciary shall provide the Board at least
quarterly, in advance of the regular meetings of the Board, a report of its
activities hereunder on behalf of the Fund and its proposed strategy for the
next quarter, all in such form and detail as requested by the Board. Fiduciary
shall also make an investment officer available to attend such meetings of the
Board as the Board may reasonably request.
(e) In carrying out its duties hereunder, Fiduciary
shall comply with all reasonable instructions of the Fund or FTAS in connection
therewith. Such instructions may be given by letter, telex, telefax or telephone
confirmed by telex, by the Board or by any other person authorized by a
resolution of the Board, provided a certified copy of such resolution has been
supplied to Fiduciary.
2. In performing the services described above, Fiduciary shall
use its best efforts to obtain for the Fund the most favorable price and
execution available. Subject to prior authorization of appropriate policies and
procedures by the Board, Fiduciary may, to the extent authorized by law and in
accordance with the terms of the Fund's Prospectus and Statement of Additional
Information, cause the Fund to pay a broker who provides brokerage and research
services an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker would have
charged for effecting that transaction, in recognition of the brokerage and
research services provided by the broker. To the extent authorized by applicable
law, Fiduciary shall not be deemed to have acted unlawfully or to have breached
any duty created by this Agreement or otherwise solely by reason of such action.
3. (a) Fiduciary shall, unless otherwise expressly
provided and authorized, have no authority to act for or represent FTAS or the
Fund in any way, or in any way be deemed an agent for FTAS or the Fund.
(b) It is understood that the services provided by
Fiduciary are not to be deemed exclusive. FTAS acknowledges that Fiduciary may
have investment responsibilities, or render investment advice to, or perform
other investment advisory services, for individuals or entities, including other
investment companies registered pursuant to the 1940 Act, ("Clients") which may
invest in the same type of securities as the Fund. FTAS agrees that Fiduciary
may give advice or exercise investment responsibility and take such other action
with respect to such Clients which may differ from advice given or the timing or
nature of action taken with respect to the Fund.
4. Fiduciary agrees to use its best efforts in performing the
services to be provided by it pursuant to this Agreement.
5. FTAS has furnished or will furnish to Fiduciary as soon as
available copies properly certified or authenticated of each of the following
documents:
(a) the Company's Articles of Incorporation, as filed
with the Secretary of State of the State of Maryland on July 6, 1990, and any
other organizational documents and all amendments thereto or restatements
thereof;
(b) resolutions of the Company's Board of Directors
authorizing the appointment of Fiduciary and approving this Agreement;
(c) the Company's original Notification of Registration
on Form N-8A under the 1940 Act as filed with the SEC and all amendments
thereto;
(d) the Company's current Registration Statement on
Form N-1A under the Securities Act of 1933, as amended and under the 1940 Act as
filed with the SEC, and all amendments thereto, as it relates to the Fund;
(e) the Fund's most recent Prospectus and Statement of
Additional Information; and
(f) the Investment Advisory Agreement between the Fund
and FTAS.
FTAS will furnish Fiduciary with copies of all amendments of or supplements to
the foregoing documents.
6. Fiduciary will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund
and prior, present or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Fund, which approval shall not be unreasonably withheld and may not be
withheld where Fiduciary may be exposed to civil or criminal contempt
proceedings for failure to comply when requested to divulge such information by
duly constituted authorities, or when so requested by the Fund.
7. (a) FTAS shall pay a monthly fee in cash to Fiduciary
of one-half of the investment advisory fee paid to FTAS by the Fund, which fee
shall be payable on the first business day of each month in each year as
compensation for the services rendered and obligations assumed by Fiduciary
during the preceding month. The advisory fee under this Agreement shall be
payable on the first business day of the first month following the effective
date of this Agreement, and shall be reduced by the amount of any advance
payments made by FTAS relating to the previous month.
(b) FTAS and Fiduciary shall share equally in any
voluntary reduction or waiver by FTAS of the management fee due FTAS under the
Investment Advisory Agreement between FTAS and the Fund.
(c) If this Agreement is terminated prior to the end of
any month, the monthly fee shall be prorated for the portion of any month in
which this Agreement is in effect which is not a complete month according to the
proportion which the number of calendar days in the month during which the
Agreement is in effect bears to the total number of calendar days in the month,
and shall be payable within 10 days after the date of termination.
8. Nothing herein contained shall be deemed to relieve or
deprive the Board of its responsibility for and control of the conduct of the
affairs of the Fund.
9. (a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations or duties hereunder on the
part of Fiduciary, neither Fiduciary nor any of its directors, officers,
employees or affiliates shall be subject to liability to FTAS or the Fund or to
any shareholder of the Fund for any error of judgment or mistake of law or any
other act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security by the Fund.
(b) Notwithstanding paragraph 9(a), to the extent that
FTAS is found by a court of competent jurisdiction, or the SEC or any other
regulatory agency to be liable to the Fund or any shareholder (a "liability"),
for any acts undertaken by Fiduciary pursuant to authority delegated as
described in Paragraph 1(a), Fiduciary shall indemnify and save FTAS and each of
its affiliates, officers, directors and employees (each an "Indemnified Party")
harmless from, against, for and in respect of all losses, damages, costs and
expenses incurred by an Indemnified Party with respect to such liability,
together with all legal and other expenses reasonably incurred by any such
Indemnified Party, in connection with such liability.
(c) No provision of this Agreement shall be construed
to protect any director or officer of FTAS or Fiduciary, from liability in
violation of Sections 17(h) or (i), respectively, of the 0000 Xxx.
10. During the term of this Agreement, Fiduciary will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commissions, if any)
purchased for the Fund. The Fund and FTAS will be responsible for all of their
respective expenses and liabilities.
11. This Agreement shall be effective as of the date given
above, and shall continue in effect for two years. It is renewable annually
thereafter for successive periods not to exceed one year each (i) by a vote of
the Board or by the vote of a majority of the outstanding voting securities of
the Fund, and (ii) by the vote of a majority of the Directors of the Company who
are not parties to this Agreement or interested persons thereof, cast in person
at a meeting called for the purpose of voting on such approval.
12. This Agreement may be terminated at any time, without
payment of any penalty, by the Board or by vote of a majority of the outstanding
voting securities of the Fund, upon sixty (60) days' written notice to FTAS and
Fiduciary, and by FTAS or Fiduciary upon sixty (60) days' written notice to the
other party.
13. This Agreement shall terminate automatically in the event of
any transfer or assignment thereof, as defined in the 1940 Act, and in the event
of any act or event that terminates the Investment Advisory Agreement between
FTAS and the Fund.
14. In compliance with the requirements of Rule 31a-3 under the
1940 Act, Fiduciary hereby agrees that all records which it maintains for the
Fund are the property of the Fund and further agrees to surrender promptly to
the Fund, or to any third party at the Fund's direction, any of such records
upon the Fund's request. Fiduciary further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
15. This Agreement may not be materially amended, transferred,
assigned, sold or in any manner hypothecated or pledged without the affirmative
vote or written consent of the holders of a majority of the outstanding voting
securities of the Fund and may not be amended without the written consent of
FTAS and Fiduciary.
16. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule, or otherwise, the remainder of this
Agreement shall not be affected thereby.
17. The terms "majority of the outstanding voting securities" of
the Fund and "interested persons" shall have the meanings as set forth in the
1940 Act.
18. This Agreement shall be interpreted in accordance with and
governed by the laws of the State of Florida of the United States of America.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers.
FRANKLIN XXXXXXXXX ASSET STRATEGIES, LLC
By:/s/XXXXXXX X. XXXXXXX
---------------------------
Title:
FIDUCIARY INTERNATIONAL, INC.
By:/s/XXXXXXX X. XXX
--------------------------
Title:
Templeton Fiduciary Non-U.S. Core Equity Fund hereby acknowledges and agrees to
the provisions of paragraphs 9(a) and 10 of this Agreement.
Templeton Institutional Funds, Inc. on behalf of
Templeton Fiduciary Non-U.S. Core Equity Fund
By:/s/XXXXX X. XXXX
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Title:
